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Where next for daily oil prices ?

Crude oil futures continued to trade in a narrow range yesterday, with the October WTI contract closing the day marginally lower at $95.36 per barrel, having reached an intraday high of $96.03 during the oil trading session. Following the recent breakout from the sideways consolidation of the mid to late August, the recent bullish trend now appears to be stalling once again, with some strong resistance now forming in the $97.80 per barrel area.

On our Hawkeye chart we can see that Tuesday’s oil trading session gave us our first change in trend dot colour, reflecting the sideways congestion which has also been coupled with a flattening of the green trend dots. Yesterday’s price action was also accompanied by selling volume on the daily chart, suggesting further possible downside price action in the short term. However, the three day trend and volume remains firmly bullish for the time being. In addition our Hawkeye Heatmap is also bullish, and until we see any firm signals of a change in trend, the current price action may simply be pause in the recent bullish trend since the reversal in late July.

For this trend to continue, we now need to see a clear break and hold above the $98 per barrel region, and should this occur in due course, then expect to see daily oil prices break higher, continue the bullish trend, and start to test the underside of the strong price resistance in the psychological $100 per barrel region. Fundamentally of course, should the FED follow through on their hints at further stimulus, then we can expect to see the US dollar weaken considerably in the medium term with a consequent rise in commodities in general along with oil.

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